Property Taxes in Michigan

Michigan Property Taxes

Property taxes can be confusing, ever for those of us that deal with them everyday! Here’s a brief and simple breakdown of the process.

All homes are assessed by the city/township to determine their value. They do this by using sales trends in the area. It is usually a vague, but reasonably accurate figure for an average house in the subject area.

To begin, let’s go over some common “tax terms” used by the cities:

True Cash Value
This is the city’s name for “Market Value” or what your home is worth based on sales in the area. Not necessarily looking at specific upgrades. But a home of your size in your area.

State Equalized Value
Your SEV is 50% of your true cash value

Taxable Value
Your taxable value is the portion of your SEV that you actually pay taxes on. This # will be equal to or less than your SEV.

Millage Rate
This is the rate of taxes you pay per $1000 in taxable value.

Principal Residence Exemption
Also known as a homestead tax break. If the property is your primary residence you would get 100% exemption.

Inflation Rate Multiplier or IRM
The determined rate of inflation for the given year. Your taxes can never increase more than this amount unless modifications were made to the house that would increase its value.

Board of Review
Also known as Tax Appeal Board or “Protest”. This is who you go speak with if you think you are over assessed on your taxes.

When you get your assessment in the mail, the main things to check for is your principal residence exemption (should be 100% if primary residence), your taxable value, and your SEV.
If it is your first year in a house, your SEV and Taxable Value will be the same. As the years go by, your SEV will most likely start going up at a much faster rate than your taxable value. This is because the SEV represents half of the true cash value of your home, where-as the taxable value represents only the portion you have to pay taxes on. You are only subject to an increase in taxable value equal to the inflation rate multiplier each year. So if property values go up 20%, your tax bill will still only go up 1-2% depending on that years rate of inflation. But the increase in property values will still be reflected in your SEV for informational purposes. If/When there is a transfer of ownership, the taxable value will reset to be even with the SEV again.

Now your actual tax bill is based on the millage rate your for you city/county. You can find a listing of millage rates HERE. Whatever your millage rate is, is the dollars per thousand you will be charged. Here’s a real life example:

Bob just bought a new home in Commerce Twp worth $100,000. So Bob’s taxable value is $50,000. His millage rate is 26, so Bob is going to pay $26 for every $1000 of taxable value.
50 x 26 = $1300 in yearly property taxes.

Property taxes are broken down twice a year. July 1st and December 1st, and there is a 2 month grace period to pay them, all thought most people just include them in their mortgage as an escrow.

Property Tax Appeals

Occasionally the city will over assess a property. Either they have data wrong about the house, the area, or other factors that have contributed to an inflated assessment. If you feel your assessment is high, feel free to contact us for a market analysis to determine the market value of your home and if you are over assessed. This is a free service we provide to all local home owners. If we do find your assessment is high, then we will provide you with documentation you can take to the city board of review.
There will be instructions on your assessment for board of review dates and how to make an appointment.

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